Depreciation of the rial comes amid boiling tensions with the West and continuing protests in Iran.

On Sunday, the United States dollar went past the 450,000-rial mark for the first time on the open market.

Former Central Bank of Iran governor, Ali Salehabadi, had been sacked after a previous rapid depreciation of the rial in late December that saw it slump to more than 440,000 against the greenback at the open market.

His replacement, Mohammad Reza Farzin, had vowed to artificially keep the rate of the currency at 285,000 rials against the dollar for imports of essential goods in an effort to keep prices stable during a 40 percent inflation rate.

“Today the central bank faces no limitations in terms of currency and gold reserves, and the main reason behind the currency fluctuations is media hype and psychological operations in the society,” Farzin said on Saturday.

As the rial went into another freefall on Saturday, the central bank claimed that 300 million euros ($326m) of Iran’s money in Iraq had been received, despite US sanctions, and injected into the market.

Central bank to raise exchange limit

On Sunday, the central bank said it will soon raise the maximum amount of currency that can be sold to an individual annually from 2,000 euros ($2,176) to 5,000 euros ($5,439) in an apparent effort to show it has no shortage of currency.

The cap was introduced after the US unilaterally abandoned the 2015 Iran nuclear deal with world powers in 2018 and imposed harsh sanctions, triggering a new currency crisis in Iran.

To combat currency devaluation, Iran’s police force has periodically announced the arrest of dozens of currency speculators in recent months.

This week’s depreciation of the rial comes amid boiling tensions with the West, and as protests in Iran, that started in September last year – which Tehran accuses the West of orchestrating – have persisted.

Earlier this week, the European Parliament overwhelmingly approved a resolution that calls for designating the Islamic Revolutionary Guard Corps (IRGC) a “terrorist” organisation, and for sanctions on Supreme Leader Ayatollah Ali Khamenei, President Ebrahim Raisi and others.